The Biden administration has filed a lawsuit to block JetBlue Airways’ $3.8 billion acquisition of Spirit Airlines, asserting that the deal would reduce competition and increase airfares for consumers.
The Justice Department claimed that the merger would particularly harm budget-conscious travelers who rely on Spirit for cheaper alternatives to JetBlue and other airlines.
Attorney General Merrick Garland held a news conference to announce the antitrust lawsuit, highlighting the administration’s commitment to preventing further consolidation in the airline industry.
“If allowed to proceed, this merger will limit choices and drive up ticket prices for passengers across the country” and “eliminate Spirit’s unique and disruptive role in the industry,” Garland stated.
The lawsuit, filed in federal district court in Boston, emphasized that the merger would eliminate the largest “ultra-low-cost carrier” in the nation. These airlines typically offer the lowest fares but charge additional fees.
Justice Department lawyers argued that Spirit’s exit would remove about half of all ultra-low-cost seats from the market.
They cited a Spirit estimate indicating that fares drop 17% when it enters a route, and a JetBlue calculation showing that fares increase 30% when Spirit exits a route.
Both airlines pledged to continue fighting for their agreement.
JetBlue CEO Robin Hayes argued that the merger would enhance competition by expanding his New York-based airline, making it more capable of challenging American, United, Delta, and Southwest. He criticized the DOJ for contributing to airline consolidation.
“We believe the DOJ has got it wrong on the law here and misses the point that this merger will create a national low-fare, high-quality competitor to the Big Four carriers which — thanks to their own DOJ-approved mergers — control about 80% of the U.S. market,” Hayes said.
JetBlue and Florida-based Spirit had anticipated a legal challenge for weeks. The Justice Department had previously requested more documents and depositions regarding JetBlue’s proposal to acquire Spirit, the nation’s largest budget airline. Settlement negotiations were unsuccessful.
As indications grew that the government would challenge the merger, JetBlue launched a pre-emptive campaign to argue that the deal would benefit consumers by creating a stronger competitor to the four larger carriers.
Hayes expressed disappointment but not surprise at the lawsuit.
“We said when we got the offer approved by the Spirit shareholders last year that we didn’t think we would close until the first half of 2024, expecting a trial,” he remarked on “CBS Mornings.”
